JAY CHEMICAL INDUSTRIES LIMITED Versus UNION OF INDIA
GST
2018 (10) TMI 876 – GUJARAT HIGH COURT – [2018] 59 G S.T.R. 307 (Guj), 2018 (19) G. S. T. L. 440 (Guj.)
GUJARAT HIGH COURT – HC
Dated:- 11-10-2018
R\/SPECIAL CIVIL APPLICATION NO. 10828 of 2018
GST
MR AKIL KURESHI AND MR B.N. KARIA, JJ.
\nFor The Petitioner (s) : MR.VINAY SHRAFF, ADVOCATE with MR.VISHAL J DAVE(6515), NIPUN SINGHVI(9653), MR.PRATEEK GATTANI, MS.HIRAL U MEHTA, ADVOCATES
\nFor The Respondent (s): MR ANKIT SHAH (6371)
\nORAL JUDGMENT
\n(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
\n1. Petitioner has made following substantive prayers in this petition:
\n “(a) Your Lordships may be pleased to issue writ of declaration and\/or any other appropriate writ(s) declaring Rule 117 of the Central Goods and Services Tax Rules, 2017 and Form GST Tran1 as ultra vires to Section 140(5) and Section 164 of the Central Goods and Services Tax Act, 2017 and also offends Article 14, Article 19(1)(g), Article 265 and Arti<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nd (b) noted above. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n corrected. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n rror was spotted. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ld and observed that how much tax credit has to be given and under what circumstances is a domain of the legislature. In case of Godrej & Boyce Mfg. Co. Pvt. Limited [Supra], the Supreme Court had upheld a rule which restricts availment of MODVAT credit to six months from the date of issuance of the documents specified in the proviso. The contention that such amendment would take away an existing right was rejected. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n without any reference to the time limit, such credits should be allowed to be transferred during the process of migration. Any such view would hamper the effective implementation of the new tax structure and would also lead to endless disputes and litigations. As noted in case of USA Agencies [Supra], the Supreme Court had upheld the vires of a statutory provision contained in the Tamil Nadu Value Added Tax Act which provided that the dealer would have to make a claim for input tax credit before the end of the financial year or before ninety days of purchase; whichever is later. The vires was upheld observing that the legislature consciously wanted to set up the time frame for availment of the input tax credit. Such conditions therefore must be strictly complied with. Thus, merely because the rule in question prescribes a time frame for making a declaration, such provision cannot necessarily be held to be directory in nature and must depend on the context of the statutory scheme. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n to the new regime. Under the new GST laws, the existing tax structure was being replaced by the new set of statutes, through an exercise which was unprecedented in the Indian context. The claims of carry forward of the existing duties and credits during the period of migration, therefore, had to be within the prescribed time. Doing away with the time limit for making declarations could give rise to multiple largescale claims trickling in for years together, after the new tax structure is put in place. This would besides making the task of matching of the credits impractical if not impossible, also impact the revenue collection estimates. It is in this context that the Supreme Court in the case of Mafatlal Industries Limited (Supra), after rejecting the contention that a person can move proceedings for recovery of tax paid upon success of some other person before the Tribunal or Court in getting such tax collection declared illegal, was further influenced by the fact that any such situa<\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" JAY CHEMICAL INDUSTRIES LIMITED Versus UNION OF INDIAGST2018 (10) TMI 876 – GUJARAT HIGH COURT – [2018] 59 G S.T.R. 307 (Guj), 2018 (19) G. S. T. L. 440 (Guj.)GUJARAT HIGH COURT – HCDated:- 11-10-2018R\/SPECIAL CIVIL APPLICATION NO. 10828 of 2018 GSTMR AKIL KURESHI AND MR B.N. KARIA, JJ. For The Petitioner (s) : MR.VINAY … Continue reading “JAY CHEMICAL INDUSTRIES LIMITED Versus UNION OF INDIA”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-14502","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14502"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/14502\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n3. He however pressed prayer( c) which arises in following factual background.
\n4. Petitioner no.1 is a company registered under the Central Goods and Service Tax Act, 2017 ('CGST Act' for short) as well as Gujarat Goods and Service Tax Act, 2017 ('GGST Act' for short). With the advent of Goods and Service Tax regime, certain transitional arrangements were made under the statute requiring the dealers and manufacturers to make declarations of the unutilised past tax credits, only upon which, the same would be migrated to the new regime. One of them was a declaration in terms of section 140 of CGST Act which is referred to as TRAN1. Initial time granted under the said provision for making such declaration was three months from the date of bringing the statute into existence i.e. 01.07.2017. Under representations, this time limit was extended from time to time. Final extension was granted till 27.12.2017.
\n5. The time limit provisions contained in rule<\/p>\n
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\n7. Counsel for the petitioner submitted that the statutory provisions concerning filing of the returns envisage scope for correction of the returns, for which, time is granted upto the due date for filing the returns. He submitted that during the transitory period, number of changes took place. It was legitimate that some of the transactions may have been overlooked by the assessees. Not granting opportunity to correct the declaration would result into substantial financial loss to the petitioner and other similarly situated dealers. Counsel relied on the decisions of Supreme Court in case of Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and Ors. reported in AIR 1987 SC 1023 and in case of Kailash Chandra and Ors. v. Mukundi Lal and Ors. reported in AIR 2002 SC 829 to contend that the statute must be read as a whole and harmonious interpretation of the provision should be granted. His attempt was therefore to persuade us to apply the provisions <\/p>\n
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\n9. This Court in case of Willowood Chemicals Pvt. Ltd.(supra) had occasion to examine the scheme under the GGST Act and CGST Act. The transitional provision and in particular of filing TRAN1 declarations and the time limit provisions contained in respect thereof. The challenge of the petitioner in the said case to the time limit provision was mainly twofold. Firstly, that the subordinate legislature did not have the authority to prescribe time limit which was not envisaged in the parent Act and secondly, that in any case such time limit provision should be seen as directory and not mandatory. The Court rejected both the contentions and upheld the time limit prescribed under rule 117 of the Rules.
\n10. The Court, in the process, made following observations:
\n “24. It is in exercise of this rule making power, the Government has framed the CGST Rules, 2017 in which; as noted, subrule (1) of Rule 117 has prescribed, besides other things, the time limit for making declara<\/p>\n
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\n 26. While the entire tax structure within the country was thus being replaced by a new framework, it was necessary for the legislature to make transitional provisions. Section 140 of the CGST Act, which is a transitional provision, essentially preserves all taxes paid or suffered by a dealer. Credit thereof is to be given in electronic credit register under the new statute, only subject to making necessary declarations in prescribed format within the prescribed time. As noted, subsection [1] of Section 164 of the CGST Act authorizes the Government to make rules for carry<\/p>\n
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